In February, President Obama signed off on a massive stimulus package to help revive our slowing economy. The last time a stimulus package like this was approved, under President Bush, millions of taxpayers received a check in the mail if they were within the income limits under the plan. A married couple who files jointly with two children, for instance, received a check for $1800–$600 for each adult, plus $300 for each child.

This time around the stimulus money will enter the economy in different ways. Some people will still receive a check. Individuals who receive Social Security, for instance, will each receive a onetime payment of $250. People who receive Railroad Workers benefits or Veterans benefits who do not yet receive Social Security will also receive the check as long as they were receiving these benefits as of the end of January. The money will be sent either via check or direct deposit, depending on how you choose to receive your monthly benefits in these programs.

For the rest of the taxpayers out there, the stimulus money will not come in the form of a check. Instead, the tax withholding on paychecks will be reduced, leaving more money in the pockets of workers each month. The income limits on this program are similar to the last stimulus package. For the average individual, this should mean about $45 more a month left in your paycheck. For married couples, the number is closer to $65. If you earn more than $75,000 annually, the amount you received begins to be reduced.

This is not a tax rebate. Instead, it’s a tax credit, which means it will not have to be repaid on your taxes next year. Self employed workers can adjust their quarterly tax payments to adjust for this change. The numbers won’t work out perfectly for everyone as we progress through the year, but any part of the benefit that you don’t receive in the form of less withholding on your paycheck can be claimed when you file your 2009 taxes early next year.

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Tags: paycheck, social security, stimulus, tax credit, taxes

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